How To Watch A Startup Presentation

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How To Watch A Startup Presentation


This article is in response to an excellent article Paul Graham posted recently titled “How To Present To Investors”.  If you are the founder of an early-stage startup and expect to pitch your company to angels or VCs someday, I highly recommend the article.

Paul’s article was motivated in part by the fact that Y Combinator (the early stage investment firm in which he is a partner) is hosting an event called “Angel Day”.  On Angel Day, the current crop of Y Combinator  startups (companies that he and his partners have funded recently) will be pitching to a group of potential investors.  I’m scheduled to attend this event, as one of those potential angel investors.

Having been on both sides of the fence (heard pitches and given pitches), I have come to realize that many articles have been written to provide advice to entrepreneurs on how to make effective pitches to investors.  What hasn’t been covered much is the reverse:  what investors should do to maximize the value they get from startup pitches.  Hence, this article.  To keep myself focused, I’ll pretend I’m writing to other attendees of the Y Combinator Angel Day presentations.  However, most of these tips should apply equally well to other similar situations.

How To Watch A Startup Presentation
  1. If You’re There, Be There

Nothing surprises me (or irritates me) more than having people attend a startup pitch and them mentally “check out” within minutes.  A popular activity is checking email on a Blackberry.  Assuming that this activity is not intended to convey some sort of importance (I think most investors are not that insecure), I can only guess that this comes out of a force of habit and a short attention span.  My advice:  If you thought the meeting was worth your time to go, you are being inefficient if you’re not engaged.  Even those with the best pattern matching algorithms in the world need some inputs into those algorithms.  If you’re there, be there.  You’re wasting your time otherwise.
  1. Learn Something

It is entirely possible that the pitch you’re hearing is of absolutely no interest.  It may be an idea that you don’t like, a category that you’re not interested in, etc.  However, I think it’s important to remember that the best startup founders have spent a lot more time thinking about the problem.  In the case of Y Combinator companies, they’re not only building products to solve a problem, they are likely part of the larger target market.  These are the early adopters and people keeping their pulse on technology.  As such, there are lots of important things to learn about the state of the industry and where things are headed.
  1. Keep Things In Context

I’ve seen a number of startup pitches where someone in the audience asked one of the standard questions.  The most common being:  “That’s great, but how are you going to make money?”.  Though business models are certainly an important factor, in the first pitch (and particularly in a format like the Y Combinator presentations) it is unlikely you’re going to get a thoughtful and productive answer.  So, unless you’re there purely to rationalize why this is a terrible startup and why you’d never consider putting money in – try to remember the limitations of the format and context.  If you have to ask questions, ask ones that will actually tell you something useful.
  1. Focus On The Problem And The Solution

Many startup presenters have little or no formal experience pitching to anybody – let alone a group of smart but cynical investors.  So, don’t judge the quality of the startup based on the polish of the presentation.  In fact, at this stage in the game, if the pitch is really, really polished it could be a mild signal that one or more of the founders cares more about the pitch than they do about the problem.  I tend not to penalize startups for having good presentations, but it’s also important not to penalize them too much for having mediocre ones.  Let the passion for the problem shine through.
  1. Give Back Something Useful

Many startup founders (particularly the Y Combinator ones) are early in their careers.  They’re working hard to solve a problem they care about.  The ones I have met are genuine entrepreneurs.  Though you may or may not like the current idea, I think it is important to support those pursuing their dreams and taking the entrepreneurial leap.  Be candid, but be constructive.  These are really smart, hard-working people willing to listen and take input.  Though the investment may not make sense for you, it doesn’t mean that you can’t help in some way.  If you’re an angel investor, chances are that you were in their shoes once too.
  1. Be Courteous and Polite

This is likely going to be the most controversial item on the list.  Many investors need to remind themselves that startup founders are people too.  (Though in some cases, I think investors don’t discriminate – they’re equally discourteous to everyone).  I’m not sure why, but I’ve found that people investing their own money (angels) are usually more courteous and polite than those investing other people’s money (VC) – but that’s a topic for another day.  

I look forward to seeing the Y Combinator companies later this week.  If you’re one of the startups presenting – or one of the investors attending, drop me a note. 

Posted by on Mon, Aug 07, 2006



I just sent the Paul Graham post to several of my portfolio clients and entrepreneur friends, and now I'm about to send this to my angel and VC friends.

I've listened to a great many pitches, both one-on-one and in group settings. There is definitely an art to participating in pitches as an audience member. Since a startup company itself acts as the “client” to an angel, not the LP in a VC fund, I’ve found angels are warmer to the pitch than other investor types. On the other hand, I've also witnessed angels chomping at the bit to poke holes in a pitch or throw the entrepreneur off their game. This is predatory behavior and it's designed to show the other members of an audience how smart the potential investor thinks they are, but what it really does is demonstrate that you shouldn't co-invest with them. I find it incredibly rude and detrimental to the deal if someone in the audience raises an out-of-left-field question about the business or market, or asks an irrelevant question about an issue that is clearly further down the road than where the deal is – like tax or HR issues. I think that in an organized angel or investor group pitch, the group should strive to make the deal a success, whether they fund it or not, simply because it increases their deal flow in the future. If the entrepreneur leaves with a bad taste in their mouth, or feeling beat up, then they are certainly going to steer their startup peers away from the group.

I know I have a bad habit of interrupting with a softball question, but that is only to say that I "get it" so they can spend time on the exciting parts of the pitch. Although I think that questions, even hardball ones, are a much better sign for an entrepreneur than hearing nothing at all.

posted on Monday, August 07, 2006 at 1:28 PM by Marc Nathan

Great stuff!!

Could you provide more detail on why asking "how are you going to make money?' would not tell you something useful?

I always asked this question and the depth of response struck me as the best way of gauging the maturity of the commercial thinking of the entrepreneur(s). I find it pretty easy to penetrate BS in answers to this question. Its also pretty easy to see how the entrepreneur really sees something most miss about the market. Either way the asnwer to this question is testable with a little after-meeting legwork.

But I'd really like your elaboration.

Thanks, Richard

posted on Monday, August 07, 2006 at 1:53 PM by Richard Freytag

I agree that "how are you going to make money" is an important question.

In the above article, the basis for not asking it had more to do with context and timing. For most of the early-stage companies, like the YCombinator folks, there has not been enough time to think about business models. These are very young entrepreneurs that are looking to solve a specific problem and have not had rigorous thinking go into business models yet.

posted on Monday, August 07, 2006 at 2:10 PM by

In regards to the advice on how to watch a startup presentation, it will be interesting to see how the VC's will respond while on camera on CBC's upcoming reality show. I've been keeping up-to-date with some of the buzz, but essentially the show will consist of entrepreneurs pitching their ideas to the VCs for a series they're calling "Dragon's Den". I wonder if it will be over-dramaticized, or how different the VCs might be off-camera?

And since there are a few blogs logging the production (such as a "mentor capitalist" who's on the set and blogging, it does seem pretty realistic since he gives the play-by-play of the happenings. (I'll be watching and keeping up with the events about the show, with the plans of pitching myself one day; to that end, I figure the only difference with the entrepreneurs is that they might be sweating a little more than usual)

posted on Tuesday, August 08, 2006 at 2:31 AM by Mel. B.

I think that your bullet points are useful for any type of courtous, learn present....keep things in context...

Good luck to the Y presenters...enjoy!

posted on Tuesday, August 08, 2006 at 9:53 AM by

Nice reposte to Graham's presentation tips. When I envision YCombinator meetings I see mature investors and a bunch of kids pitching them. A reflection of the reality I see more often is mature entrepreneurs pitching to young VC's some of whom did not even experience the dotcom boom/bust, let alone the recession of the early '80s.

posted on Tuesday, August 08, 2006 at 5:20 PM by Richard Stiennon

Apologies to those who may already have seen this but I think tailoring to the audience is important to keep the VC from fiddling with Blackberry in the midst of your selling him your dream.. (Most VCs in the UK here are 'him' so hold your PC guns)

Guy Kawasaki's 10/20/30 rule may go some way towards achieving better reception of your dreams..

posted on Thursday, August 10, 2006 at 5:10 AM by S Y


Insightful article. what will be your suggestion for the person who is presenting his potential business idea to VC.

posted on Monday, August 14, 2006 at 6:18 AM by John

Interesting Blog. Just to add, I believe that the key topics should be Company introduction, Mission statement, Pain and value proposition, The product/solution/service, The market and competition, Business Model, Case study/Client base, SWAT analysis (optional), Financials and Summary. 
You can find additional thoughts on this issue in my web I would be happy to get any feedback through the site. 

posted on Friday, April 17, 2009 at 2:39 PM by Hagay Levy

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